The EUR/GBP pair has been consolidating for the longer-term. Somewhere near the 0.88 handle, there is a significant amount of demand for this pair, just as there is a lot of supply near the 0.90 level. I think that the market is going to continue to stay within this range, at least until we get some answers to the negotiations between the European Union and the United Kingdom. In a sense, I feel that the pair has simply been in a holding pattern, and therefore offers nice range bound trading.
In general, I am bullish of this pair, as I believe that people will look towards the upside, as the European Union will be much more stable than the United Kingdom over the next several years. That’s not to say that the United Kingdom is going to fall apart, far from it. But what it does say is that traders are much more comfortable dealing with the known, as opposed to betting on an uncertain outcome. I believe that this pair will rally and try to go towards the parity level over the next couple of years, but it will do so on its own time. Although this would be very negative for the British pound, I believe that the British pound will rally against other currencies, and this is going to be a phenomenon in this market on the whole. I am a buyer of dips, and once we break above the 0.90 level, I expect that we are going to go to the 0.93 level after that.
EUR/GBP Video 21.12.17
This article was originally posted on FX Empire